Inequity by Default? Metropolitan Foreclosure and Housing Market Dynamics

Abstract

The devastating consequences of the Great Recession on individuals and households across the United States are well-documented and far-reaching. However, few studies have attempted to connect the foreclosure crisis with housing market conditions known to reshape processes of residential stratification in American metropolitan areas. This study is among the first to investigate the impact of metropolitan-level foreclosure concentration on five features of the urban housing market: internal migration, minority suburbanization, housing value, minority homeownership, and racial residential segregation. I combine metropolitan-level census data containing demographic, economic, and housing characteristics with a unique and expansive geocoded dataset covering nearly all foreclosure listings in the U.S. between 2005 to 2010. Results indicate that concentrated home mortgage foreclosure predicts increasing internal migration and declining housing values in metropolitan areas. Despite theoretical expectations, foreclosure concentration appears to be associated with rising minority suburbanization and homeownership rates, while models of minority-white segregation are unable to reproduce significant results uncovered in prior research. The effects of foreclosures on housing market dynamics are more foreboding for minorities if, in addition to depreciating home values, rising rates of internal migration and suburbanization are markers of residential disadvantage.